Pakistan: Robust vendor industry must for efficient automobile industry

The sector experts are of the consensus that the policy governing automobile industry in Pakistan has remained ‘OEM centric’ from the day one. This includes, incentives for the new entrants, lopsided indigenization policy, nominal difference in the duty rates on CKD kits and basic raw material and above all failure of the government in containing influx of parts as ‘scrap’. As a result, the vendor-industry has been fighting for its existence.

The biggest proof is that the annual turnover of the replacement market (parts market) in Pakistan is estimated around PKR35 billion. Ironically out of this only 5% is being met by the local industry. Most of the parts are imported as ‘scrap’. High-end electronic components are being ‘smuggled’. As a result local vendor fail to achieve economy of scale.

If I peep into the history, disbanding the manufacturing of Bedford trucks and buses in Pakistan is the ‘assassination’ of the units which were manufacturing engine blocks, gear, rings and pistons. This genocide was done soon after nationalization of the unit manufacturing Bedford trucks and buses in Pakistan and commencement assembly of a Japanese brand at the facility. This also led to ‘financial demise’ of Pakistan Machine Tool Factory operating in Karachi-Sindh.

Analysts also refer to the ‘absurd’ policies of the Government of Pakistan. Lately the number of OEMs in Pakistan has exceeded 18, from around half a dozen. All the new entrants were allowed to import completely built units (CBUs) in significantly large quantities and given a long period to even commence local assembly. They were also allowed to import many parts on the premise that local vendors are incapable of producing parts as per their global standards.

A question arises, if the local vendors are incapable of producing parts of international standards, who is to be blame, OEM or vendor? Sector analysts say that the GoP facilitates the OEMs the maximum because they have brought foreign investment. However, even the tier-one parts manufacturers are not given that kind of VVIP status.

At this time headlines are appearing in local media that the OEM are facing problems in opening letters of credit, due to the limited availability of the foreign exchange with State Bank of Pakistan (SBP). However, there is little talk about problems being faced by the vendors, which mostly fall in the category of SMEs and micro-enterprises. There are approximately 2,000 vendor units, which employ nearly 100,000 people.

A points which needs to be deliberated is that OMEs have borrowed heavily from the financial institutions, whereas vendor units, particularly third-tier units having the largest population and employment have invested their own money. Any deviation/concession to the OEMs to import parts which can be produced locally renders these units economically unviable.

Although, some of the readers don’t appreciate reference or comparison with India, it must be remembered that for decades it kept of models which did not have high ecstatic value, only to support the vendor units.

Another problem faced by Pakistan is that at present no steel manufacturing plant is operating in the country. Most of the units are ‘re-melting’ units which mostly use scrap. The output is below ‘prime quality’, which also lowers the quality of the body of the CBUs.

It may not be out of context to say that the two leading tractor manufacturing units face intermittent closure, because of high inventory levels. The incumbent government has allowed import of second-hand tractors, which is highly detrimental for the local manufacturers. It is ironic because the indigenization level is more than 95%.

One also fails to understand that the GoP has fixed agri lending target of PKR 1.8 trillion. The country needs use of machinery in agriculture, and tractor is the basic machine used for ground leveling, particularly laser-guided tractors. Appropriate field leveling also helps in prudent use of water, which is in short supply in the country. 

 

 

 

Iraq: Basrah-Aqaba oil pipeline face bleak outlook

Iraqi aspirations to move ahead with a long-planned crude pipeline from Basrah to Aqaba in Jordan have been dealt a major blow after the head of a powerful Shia military group in Iraq said the project will never happen.

"Jordanians must know their battle is doomed for failure. The Basrah-Aqaba oil pipeline will never be," said Ali al-Asadi, head of Iraq's Harakat Hezbollah al-Nujaba (HaN). "Let them try and they shall witness what happens to them and whoever collaborates with them."

HaN is known for its extremely close ties with Iran. Al-Asadi issued the statement after Iraqi lawmaker Mustafa Jabbar Sanad revealed that Jordanian officials — including the speaker of parliament, the Jordanian king's advisor and the head of intelligence — had met with senior Iraqi Shia, Sunni and Kurdish officials and agreed on the pipeline's implementation.

Sanad is a member of the pro-Iran Shia Co-ordination Framework group and was behind a lawsuit against the federal government in Baghdad over monthly payments to the Kurdistan Regional Government (KRG).

Iraq's speaker of parliament Mohammed al-Halbousi said on January 14, 2023 that the Basrah-Aqaba pipeline will see the light, following a meeting with his Jordanian counterpart Ahmad Al-Safadi during an official four-day visit to Iraq.

Al-Halbousi said the project will be executed as soon as the new government in Baghdad overcomes certain obstacles, not least the high cost of the pipeline.

Baghdad's most recent estimate is that the project will not exceed US$8.5 billion, down from its previous estimate of below US$9 billion.

Costs and financing have been major barriers for the project for several years, with both Iraq and Jordan looking for ways to cut expenses.

The proposed pipeline consists of two sections. A 2 million barrels/day capacity line extending from Basrah to Haditha near the Syrian border would transport crude to Iraqi refineries and power stations. A second one million barrels/day pipeline would extend from Haditha to Aqaba in northern Jordan.

 

Saudi Arabia: Economy grows by 8.7% in 2022

Saudi Arabian economy grew by 8.7% in 2022 as compared to the previous year, according to flash estimates posted by the General Authority for Statistics (GASTAT) on its official website on Tuesday.

According to the report, available at its website, the real GDP during the fourth quarter of 2022 grew by 5.4% as compared to Q4 of 2021, while the real GDP during 2022 grew by 8.7% as compared to 2021.

The report indicated that the real GDP of oil activities grew by 6.1% during the fourth quarter of the year 2022, as compared to the same quarter of the previous year, 2021. The real GDP of oil activities during 2022 grew by 15.4% compared to the previous year, 2021.

The real GDP of non-oil activities grew by 6.2% as compared to the same quarter of the previous year. The real GDP of non-oil activities during 2022 increased by 5.4% as compared to last year.

The report showed that the seasonally adjusted real GDP increased by 1.5% during the fourth quarter of 2022 compared to the third quarter of 2022.

GASTAT is the only official statistical reference for statistical data and information in Saudi Arabia. It carries out all the statistical work in addition to the technical oversight of the statistical sector.

It also designs and implements field surveys, conducts statistical studies and research, analyzes data and information, and documents and archives all works of information and statistical data covering all aspects of life in Saudi Arabia from its multiple sources. 

Central banks bought the most gold in 2022

Central banks around the world added a whopping 1,136 tons of gold worth some US$70 billion to their stockpiles in 2022, by far the most of any year since 1967, the World Gold Council (WGC) said on Tuesday.

The data underlines a shift in attitudes to gold since the 1990s and 2000s, when central banks, particularly those in Western Europe that own a lot of bullion, sold hundreds of tons a year.

Since the financial crisis of 2008-09, European banks stopped selling and a growing number of emerging economies such as Russia, Turkey and India have bought.

Buying dipped during the coronavirus pandemic but accelerated in the second half of 2022, with central banks purchasing 862 tons between July and December 2022, according to the WGC.

Banks including those of Turkey, China, Egypt and Qatar said they bought gold last year. But around two-thirds of the gold bought by central banks last year was not reported publicly, the WGC said.

Banks that have not regularly published information about changes in their gold stockpiles include those of China and Russia.

"Central bank buying in 2023 is unlikely to match 2022 levels," the WGC said.

"Lower total reserves may constrain the capacity to add to existing allocations. But lagged reporting by some central banks means that we need to apply a high degree of uncertainty to our expectations, predominantly to the upside."

The central bank purchases took total gold global gold demand last year to 4,741 tons, up 18% from 2021 and the highest for any year since 2011.

 

 

Blinken reaffirms need for two-state solution

US Secretary of State Antony Blinken urged Israelis and Palestinians to ease tensions on Monday during a visit to Jerusalem, reaffirming a long-stalled peace vision of two states side by side as the only path forward.

Arriving amid the bloodiest violence in years, Blinken focused censure on a Palestinian gun spree outside a synagogue that put Israel on high alert but also cautioned against any celebration or avenging of such bloodshed.

Seven people were shot dead in Friday's attack by an East Jerusalem man who was himself killed by police. Lionized by many fellow Palestinians, he had no known links to militant groups.

A day earlier, Israel carried out an unusually deep raid on the Jenin refugee camp in the occupied West Bank, killing 10 residents, most of them gunmen. At least 35 Palestinians, including fighters and civilians, have died in violence surging since beginning 2023, medical officials say.

"It is the responsibility of everyone to take steps to calm tensions rather than inflame them," Blinken told reporters after landing in Tel Aviv.

He said, “Friday's rampage was more than an attack on individuals. It was also an attack on the universal act of practicing one's faith. We condemn it in the strongest terms”.

"And we condemn all those who celebrate these and any other acts of terrorism that take innocent lives, no matter who the victim is or what they believe. Calls for vengeance against more innocent victims are not the answer."

Israeli Prime Minister Benjamin Netanyahu, whom Blinken met later on Monday, has called for more citizens to carry guns as a precaution against such street attacks. But he has also warned Israelis not to resort to vigilante violence.

Blinken is due to see Palestinian President Mahmoud Abbas on Tuesday.

Palestinian officials said Israeli settlers had set fire on Monday to two cars near the northern West Bank city of Nablus and thrown stones at a house near Ramallah, following a similar attack on Sunday.

Elsewhere in the West Bank, Palestinian officials said Israeli troops killed a 26-year-old man at a checkpoint. The army said troops opened fire on the man's car after he rammed into one of them and tried to flee an inspection.

The last round of US-sponsored talks on founding a Palestinian state alongside Israel stalled in 2014.

Netanyahu's new hardline government includes partners who oppose Palestinian statehood, and control over the Palestinian territories is divided between Abbas, who favours diplomacy, and rival Hamas Islamists, who are sworn to Israel's destruction.

After meeting Netanyahu in Jerusalem, Blinken restated Washington's belief that a two-state solution was the only way to resolve the Israeli-Palestinian conflict.

“As I said to the prime minister, anything that would move us away from that vision is, in our judgment, detrimental to Israel's long-term security and long-term identity as a Jewish and democratic state,” Blinken said.

Recent data indicates that public support for a two-state solution has reached a historic low.

According to a survey published last week by the Palestinian Center for Policy and Research, 33% of Palestinians and 34% of Israeli Jews say they support it, a significant drop from data collected in 2020.

Two-thirds of Palestinians and 53% of Israeli Jews said they opposed the two-state solution.

Blinken also addressed local political tensions, noting that the vibrancy of Israel's civil society has been on full display of late, a reference to large demonstrations against proposed changes in the judiciary that protesters see as undermining judicial independence.

Standing alongside Netanyahu, Blinken said a strength of the US and Israeli democracies was a recognition that building consensus for new proposals is the most effective way to ensure they're embraced and that they endure.

Customer Experience: Number one brand differentiator

KPMG Saudi Arabia has published the results of its 2022 global annual Customer Experience Excellence (CEE) survey. This 13th global edition, and the second to run in Saudi Arabia, is based on inputs from 1,550 consumers in Saudi Arabia measured against inputs from 89,000 consumers across 25 countries worldwide.

The Saudi version of the survey included 96 brands across nine different sectors and provided the respondents with the ability to evaluate those brands based on their personal customer experiences with them.

The survey was based on the CEE methodology, developed by KPMG’s global CEE Centre of Excellence, and is made up of six pillars; Empathy, Personalization, Expectations, Resolution, Integrity and Time & Effort.

Those pillars represent the core of this research as they make up the fundamental components of an ideal customer experience.

In terms of overall CEE performance, the non-grocery retail sector emerged as a leader among other sectors in Saudi Arabia with a score of 8.08 in 2022 and beat its last year’s performance; Followed closely by the grocery retail sector with a score of 8.05. Such results indicate notable progress in those two sectors and point to the essential role they play in consumers’ lives.

Moving down the chart, the financial services sector marked a noticeable decrease to a score of 7.94 from last year’s 8.07, indicating growing customer expectations that brands in the financial sector need to consider.

Travel and hotels, restaurants and fast food, and entertainment and leisure followed with close scores of 7.92, 7.91 and 7.90, respectively.

Finally, telecoms, utilities and logistics sectors trailed the ranking with scores of 7.82, 7.70 and 7.66, respectively.

In the area of Net Promotor Score (NPS) index, non-grocery retail, grocery retail, and the financial services scored the highest among the other sectors. In contrast, logistics and entertainment & leisure obtained the lowest NPS scores.

“As we know, these sectors have been highly commoditized over the last few years, and ‘opportunities to delight’ have become significantly rarer,” commented Adib Kilzie, Head of Customer Experience, Cloud and Enterprise Solutions at KPMG in Saudi Arabia.

“Today’s customers are better informed, better connected and more demanding than ever before. In some cases, customer experience has overtaken price and product as the number one brand differentiator. Although many organizations are investing record amounts in customer-related initiatives, not all are seeing the desired ROI in the absence of a clear CX strategy.”

Having the right customer insight through segmentation and persona development remains as a leading challenge among businesses; a challenge that is likely to hinder the business’ ability to personalize their services and orchestrate exceptional customer journeys.

“Although most businesses appreciate that need and its impact on their market share and profitability, they continue to face challenges in data collection and customer insight. The market has witnessed a rise in the use of Voice of Customer (VoC) solutions, surveys and questionnaires; however, many businesses have not been able to leverage the needed real-time data collection and decision capabilities,” Kilzie noted.

Companies are now acting purposefully, deciding what to take with them into the future and what to leave behind, he stated, adding that this points to a significant transition underpinned by new ways of working for most firms.

“The hierarchical silos of an industrial past are giving way to an agile culture for a digital future,” Kilzie concluded.

 

Drone attack on Iranian weapons factory termed phenomenal success

Despite Iranian claims, the drone attack on Iran at Isfahan was a tremendous success, according to a mix of Western intelligence sources and foreign sources, The Jerusalem Post initially reported on Sunday.

Several hours later, The Wall Street Journal came out with a similar report, stating that Israel and the Mossad were behind the attack, citing US officials.

There were four large explosions at the military industry factory, documented on social media, against a facility developing advanced weapons. The damage goes far beyond the minor roof damage that the Islamic Republic claimed earlier Sunday.

Iran's response matches responses to similar incidents. Iran’s foreign minister said the cowardly attack was aimed at creating insecurity in Iran. Their defense ministry said the explosion caused only minor damage and no casualties. The extent of the damage could not be independently confirmed.

Israel is playing mum, but most Western intelligence and Iranian sources have credited the Mossad with similarly successful attacks against Iran’s Natanz nuclear facility in July 2020, a different Natanz nuclear facility in April 2021, another nuclear facility at Karaj in June 2021 and with destroying around 120 or more Iranian drones in February 2022.

Few organizations globally, besides the Mossad, are believed to possess the advanced and surgical strike capabilities displayed in the operation.

Multiple large drones with significant amounts of explosives were involved and hit their targets with pinpoint accuracy.

In each of the prior incidents, Tehran tried initially to pretend that the attacks failed and only acknowledged the extent of the damage when satellite photos or other evidence broke into the public sphere, outflanking their denials.

It is still unclear whether the advanced weapons damaged related only to conventional warfare, or might have nuclear relevance, such as for use in ballistic missiles or explosives which can be used for both conventional and nuclear weapons.

Isfahan has been used on and off for various nuclear issues as well as non-nuclear military issues.

Iran even at one point told the IAEA that some of the nuclear activities being carried out at the Karaj nuclear facility until June 2021 had been moved to Isfahan.

The WSJ noted that there was an Iranian aerospace facility nearby, which could also be utilizing dual-use items for space launches and nuclear weapons, used for escaping and reentering Earth’s atmosphere.

Speculation centered on whether the attack was meant to set back Iran’s advanced drone program or a new program, such as the development of hypersonic missiles, with Russian help.

Hypersonic missiles fly so fast and have such advanced maneuverability that many experts believe they could penetrate all of Israel’s air defenses.

Another theme raised during the day was that the US and the CIA may have been involved this time.

Experts noted that the US and Israel just spent an entire week conducting military exercises around attacking targets, such as Iran, so carrying out such an attack immediately after these exercises could be meant to send a message as to their seriousness.

They estimated that the visit of CIA Director William Burns to Israel just before the attack was evidence of a need for a special face-to-face meeting between the CIA and Mossad chiefs preparing the attack.

The US has adopted a more aggressive tone with Iran since it provided drones to Russia in the war with Ukraine and has demonstrated even more impatience recently with Tehran’s failure to return to the 2015 nuclear deal.

 

Pakistan: Central bank Justifies decline in remittances and export proceeds

There has been a narration in print and electronic media suggesting that capping the price of US$ caused loss of US$3 billion in remittances and export proceeds. State Bank of Pakistan (SBP) termed that the view was incorrect due to a number of factors.

First, export of goods have been facing headwinds due to moderating demand in international markets as most of Pakistan’s major trading partners are going through a period of monetary tightening. For instance, US Fed increased interest rate to 4.5% to date from 0.25% in March 2022; suggesting a noticeable global monetary tightening.

Meanwhile, inflation has been significantly higher in developed world, eating into the purchasing power of consumers. These, together with domestic factors like devastating floods and ensuing supply disruptions, have negatively impacted exports. In this backdrop, linking decline in exports to relatively stable exchange rate is not appropriate, said SBP.

Second, workers’ remittances were gradually tapering off from all time high level of US$3.1 billion achieved in April 2022 due to Eid related flows. This decline is primarily attributed to global economic slowdown as higher inflation in developed countries has led to higher cost of living abroad, thus reducing the surplus funds that could be sent back to homeland as remittances.

Moreover, with the resumption of international travel post COVID, some remittances have switched back to FCY cash transfers via overseas Pakistanis travelling to Pakistan.

Thus the decline in Pakistan’s exports and remittances is a result of numbers of exogenous factors and domestic reasons and it wouldn’t be appropriate to ascribe it to exchange rate only.

Iran: Drones Attack Military Factory

A loud explosion was heard at a military industry factory near Iran's central city of Isfahan. Tehran said it was a drone strike by unidentified attackers.

There was no immediate claim of responsibility for the attack, which came amid tension with the West over Tehran's nuclear work and supply of arms for Russia's war in Ukraine, as well as months of anti-government demonstrations at home.

The extent of the damage could not be independently confirmed. Iran's Defence Ministry said the explosion caused only minor damage and no casualties.

Iranian media video showed a flash of light at the plant, which the official IRNA news agency described as an ammunitions factory. Footage showed emergency vehicles and fire trucks outside the complex.

"Around 2000 GMT on Saturday night, an unsuccessful attack was carried out using micro Aerial Vehicles (MAVs) on one of the ministry's workshop sites," the Defence Ministry said in a statement carried by Iran's state TV.

It said one drone was shot down and the other two were caught in defence traps and blown up. It caused only minor damage to the roof of a workshop building. There were no casualties."

The attack has not affected our installations and mission...and such blind measures will not have an impact on the continuation of the country's progress.

Separately, IRNA reported early on Sunday a massive fire at a motor oil factory in an industrial zone near the northwestern city of Tabriz. It gave no information about the cause of that blaze.

Iran has in the past accused its arch enemy Israel of planning attacks using agents inside Iranian territory. In July 2022, Tehran said it had arrested a sabotage team made up of Kurdish militants working for Israel who planned to blow up a sensitive defence industry centre in Isfahan.

An Israeli military spokesperson declined comment when asked if Israel had a connection to the latest incident. Israel has long said it could attack Iran if diplomacy fails to curb Tehran's nuclear or missile programs, but has a policy of withholding comment on specific incidents.

Several Iranian nuclear sites are located in Isfahan province, including Natanz, centre piece of Iran’s uranium enrichment program, which Iran accuses Israel of sabotaging in 2021. There have been a number of explosions and fires around Iranian military, nuclear and industrial facilities in recent years.

Talks between Tehran and world powers to revive a 2015 nuclear pact have stalled since September 2022. Under the pact, abandoned by Washington under President Donald Trump, Iran agreed to limit nuclear work in return for easing of sanctions.

Iran has acknowledged sending drones to Russia but says they were sent before Moscow's invasion of Ukraine last year. Moscow denies its forces use Iranian drones in Ukraine, although many have been shot down and recovered there.

 

Iran 3rd train of South Pars refinery goes operational

The third train of the South Pars phase 14 refinery has gone operational, according to the operator of the phase 14 development project, Mohammad-Mehdi Tavasoli-Pour.

Tavasoli-Pour told Shana that the fourth and last train of the refinery is also scheduled to be put into operation by the end of the current Iranian calendar year.

The first train of the phase 14 refinery went operational in mid-March 2022 and the second train was inaugurated in late November last year.

Phase 14 development is aimed at producing 56.6 million cubic meters per day of rich gas, 75,000 barrels/day of gas condensate and 400 tons/day of sulfur, and 1 million tons/year of liquefied petroleum gas and one million tons/year of ethane to be fed to petrochemical plants.

South Pars Phase 14 Refinery can be considered the final refinery to be completed in the South Pars complex. Before the construction of this refinery, 12 refineries received gas from the offshore platforms of the field and processed it.

However, after the inauguration of four offshore platforms of phase 14, the need to create more refining capacity in this complex was felt more day by day. Accordingly, the 13th government has put it on the agenda to complete the South Pars Phase 14 refinery by the end of the current Iranian calendar year and make it fully operational.

South Pars gas field, which Iran shares with Qatar in the Persian Gulf water, is divided into 24 standard phases of development in the first stage. Most of the phases are fully operational at the moment.

The huge offshore field covers an area of 9,700 square kilometers, 3,700 square kilometers of which are in Iran’s territorial waters in the Persian Gulf. The remaining 6,000 square kilometers, called North Dome, are situated in Qatar’s territorial waters.

The field is estimated to contain a significant amount of natural gas, accounting for about 8% of the world’s reserves, and approximately 18 billion barrels of condensate.

 

Brazil and Argentina planning common currency for the region

Brazil and Argentina are planning on a common currency for the region in a bid to distance themselves from the US dollar. Brazil and Argentina are the first and second largest economies in Latin America respectively. How the plan will be implemented remains to be seen, but the statement of intent is a very powerful move itself.

Washington has been using its currency as a weapon to advance its own hegemony around the world. As a result, many civilian populations have suffered from unilateral American sanctions imposed on countries that are independent or have taken the course toward independence.

President Lula, who has made Buenos Aires his first foreign trip since taking office, says that early talks are focused on developing a shared unit of value for bilateral trade to reduce reliance on US dollar.

Under the plan, the Brazilian currency (the real) as well as the Argentine currency (the peso), for example, would continue to exist, with the new tender aimed at trade transactions between different Latin American countries.

In a joint letter, the new Brazilian President Luiz Inacio Lula da Silva and Argentine leader Alberto Fernandez said they wanted to advance discussions on a common South American currency to be used for financial and trade flows.

South America’s two biggest economies will try to advance the plan during talks at a summit in Buenos Aires this week and will invite other Latin American nations to participate.

Not only Lula is reversing the policies of his predecessor, Jair Bolsonaro, by distancing Brazil from the United States he is also putting more focus on the region itself.

The idea of making trade transactions in local currencies as opposed to the US dollar is not limited to Brazil and Argentina, or Latin America for that matter.

Over the past decade, more countries have made or started similar initiatives to trade in their own currencies in a bid to ditch the US dollar.

Where the US cannot create instability through invasions, it wages wars through proxies or using other hybrid warfare mechanisms. It has also resorted to sanctions to fuel unrest in countries that don’t see eye to eye with Washington. The US goal is to destroy the economy of its adversaries with the hope of turning local populations against their governments.

Last year, the governor of the central Bank of China said Beijing will work with Asian countries to beef up the use of local currencies in trade and investment, as part of plans to strengthen regional economic resilience.

For the first time, Saudi Arabia and China have also discussed pricing oil deals in the Chinese yuan instead of US dollar.

Iran and Russia have already started trading in their national currencies after Tehran first decided to reduce use of dollar in its foreign trade.

India, among other countries, has also decided to allow rupee payments for imports and exports, which could also boost trade with other countries under American unilateral sanctions.

India's central bank has also unveiled a rupee settlement system for international trade; a move which many have said will reduce New Delhi’s demand for US dollars.

Tehran has been subjected to unprecedented unilateral sanctions by Washington. The measures, which include sanctions on Iran’s banking sector, have prevented the country from importing vital humanitarian supplies for cancer patients and children with rare diseases.

Likewise, the West has imposed unprecedented sanctions on Russia over the Ukraine war. Analysts have said that the US sanctions against Moscow could speed up the move by countries to reduce their reliance on the American currency.

The United States and its allies froze about US$300 billion belonging to Russia’s central bank’s foreign currency reserves and severely limited Russia’s access to the SWIFT payment system. Similar measures have been taken against other countries including Afghanistan, Iran, and Venezuela.

In a report, Bank of America analysts led by Michael Hartnett pointed out that US dollar debasement is the ultimate outcome as dollar weaponized in new era of sanctions.

As a result of Washington’s sanctions, countries have been seeking alternative monetary systems which have dealt a blow to the dollar itself. The role of the American currency has been declining over the past two decades, with reports indicating its share of reserve currencies have gone down to 60% from 70% over that period.

In the summer of 2021, the International Monetary Fund issued a report warning that the share of US dollar reserves held by central banks fell to 59% - its lowest level in 25 years - during the fourth quarter of 2020, according to the IMF’s Currency Composition of Official Foreign Exchange Reserves (COFER) survey.

Some analysts say this partly reflects the declining role of the US dollar in the global economy, in the face of competition from other currencies. 

Despite multiple warnings, the US has been pursuing illegal economic policies by weaponizing its currency.

A Washington-based think tank says the US has been extremely happy with its economic measures, and central banks may decide to diversify their foreign reserves instead of relying on the US dollar.

The co-director of the Institute for the Analysis of Global Security, Gal Luft has said that central banks are beginning to ask questions, and that they are wondering if their dependence on the dollar and putting all their eggs in one basket is an intelligent idea.

The removal of the US dollar as a dominant foreign currency will save more civilian lives around the world and help bring about global peace and security.

 

What if United States fails in honoring its payment obligations?

In China, Beijing maintains capital controls. The Chinese Communist Party (CCP) has been tightening its influence over the economy for years, raising questions about just how secure it is to use the yuan. This is good news for the US, but it may soon be old news. Failure by the US to honor its payment obligations, or even the possibility, would put such concerns in a very different perspective.

An outright default by the Treasury Department on US government debt would be enormously disruptive to the global financial system. Michael Feroli, Chief US Economist at JPMorgan Chase says, “It is quite plausible that it would precipitate a severe financial crisis.”

If Congress doesn’t raise the debt limit, the Treasury can employ a variety of highly questionable maneuvers to keep honoring US obligations. But doing that might shake investor confidence in the rule of law in the US, Feroli wrote in a note to clients Friday. By autumn, Wall Street analysts predict, the Treasury will be forced to decide whether to use those tricks or default on payments.

Biden and Xi Jinping have been sparring over whose political-economic system is a better model for human development. In his first address to a joint session of Congress as president two years ago, Biden said, “Xi and other autocrats think that democracy can’t compete in the 21st century with autocracies because it takes too long to get consensus”.

Washington has gone through debt-limit battles repeatedly over the years, and yet the role of the US$ and broader credibility of the US in the global financial system has remained strong. What’s different this time is the leverage far-right Republicans in the House have thanks to concessions by Kevin McCarthy in his desperate fight to become speaker. 

“Even the best case will probably see the sort of brinksmanship that occurred in the 2011 debt ceiling crisis,” Feroli said. And that episode resulted in a stock-market selloff that went global.

As compared to 2011, China today offers a much more attractive alternative to US financial markets. For one thing, it’s now open to foreign bond and equity inflows in a way that it wasn’t back then. After China finishes its abrupt, wrenching and catastrophically deadly reopening, the economy ought to be humming. It is near US$4 trillion central government bond market has plenty of scope to boost overseas ownership.

The potential contrast could have long-term effects, at a time when even some Western money managers question the relative merits of the two systems.

“Given the bickering in the US, it is no longer clear that the US form of democracy clearly works better than the autocratic CCP approach,” said Stephen Jen, who runs Eurizon SLJ Capital, a hedge fund and advisory firm in London.

US political partisanship is a major factor from which the Chinese Communists have derived considerable confidence in themselves.

Ukraine: Fighter jets to follow tanks

Ukraine’s breakthrough in securing heavy tanks from the United States and Germany has paved way for talks about sending the US F-16 fighter jets to Ukraine to defend its airspace.

The government of Ukraine quickly renewed its calls for world-class fighter jets after it secured the victory on tanks, arguing it needed the help to defend itself against Russia.

Shortly after the US announcement on tanks, Yuriy Sak, an adviser to Ukraine’s defense secretary, told The Hill that Kyiv would do everything possible to secure the fighter jets.

And Dymytro Kuleba, Ukraine’s minister of foreign affairs, tweeted Wednesday morning that Ukraine has new tasks ahead, naming western fighter jets as one of them.

ArmyINFORM, an information agency for Ukraine’s ministry of defense, also published an article Wednesday suggesting that Ukrainian pilots are already training in the US, but there has been no public announcement on such a program.

Asked to comment on the possibility of fighter jets going to Ukraine, National Security Council spokesperson John Kirby  on Wednesday said he had no news to share.

“Can’t blame the Ukrainians for wanting more and more systems,” Kirby said. “It’s not the first time they’ve talked about fighter jets, but I don’t have any announcements to make on that front.”

Kyiv operates a fleet of aging Soviet aircraft and has requested western, modern fighter jets since the onset of the war — but so far it has remained out of the nation’s grasp.

Supplying jets would be another escalation in terms of US support for Ukraine, and the Biden administration has been careful in offering support that might intensify the conflict with Russia — particularly with the fear of nuclear weapons hovering over the war.

Yet the supplying of jets seems much less unlikely after the Biden administration made a major u-turn by agreeing to send 31 Abrams tanks to Ukraine. The administration did so to convince Germany to send Leopard tanks to Ukraine. Germany also gave its blessing for other allies to send the German-made Leopards to Kyiv.

Germany has expressed opposition to sending fighter jets to Ukraine.

“There will be no fighter jet deliveries to Ukraine. This was made clear very early, including from the US President,” Germany Chancelor Olaf Scholz said in remarks to his country’s parliament after the tanks decision. “This position has not changed at all and will not change.”

Despite such remarks, a number of experts think the supplying of jets to Ukraine by the U.S. is now likely to happen.

Ukraine has slowly secured more and more advanced weaponry from the US and European allies, and they say American-made F-16s will probably follow that same course.

Tomasz Blusiewicz, a research fellow at the Hoover Institution, said most of the concerns over sending the jets are probably over logistical questions, such as training and getting the aircraft and related systems delivered.

“I think it’s now really more down to the nitty-gritty, logistical servicing and delivery and training,” he said.

The fighter jets would make a huge difference in the skies over Ukraine in combat against Russian fighter jets, which are much more outdated than western aircraft.

Both Ukraine and Russia are currently using MiG-29 fighter jets and various different models of the Sukhois aircraft, which are extremely inferior to advanced western technology.

Those advocating for sending western aircraft to Ukraine also say the US public would accept it as a means to defend Ukrainian skies and protect civilians from Russia’s relentless bombardments.

Blusiewicz explained the fighter jets, which he described as “Guardians,” would be “even more of a game-changer” for Ukraine than the battle tanks.

“In terms of air superiority, western tech … is light years away,” he said. “And for Ukrainian civilians, it now becomes more realistic to make sure these drones and rockets don’t fall on them.”

The US-made F-15s and F-16s are the cream of the crop, but other advanced fighters such as the Eurofighter Typhoon, Swedish Gripens and French-made Dassault Rafale would all be decisive on the battlefield.

US lawmakers, most of whom have prodded the Biden administration to support more and more advanced weaponry for Kyiv, also appear to show early signs of supporting this next push for the fighter jets.

A statement released by Democratic, Richard Blumenthal, Sheldon Whitehouse, as well as Republican Lindsey Graham on Wednesday applauded the Biden administration for sending tanks to Ukraine but quickly pivoted to a push for fighter jets and long-range artillery systems.

“The combination of tanks, fighter aircraft, and ATACMS will help Ukraine confront the upcoming Russian offensive and go on offense in both the east and the south in an attempt to further erode Russia’s capability to continue fighting in Ukraine,” the statement read. “Let’s give the Ukrainians everything they need to win — now.”

Most of the concerns around supplying advanced weaponry before — from the HIMARS rocket launchers to the western battle tanks — revolved around escalating tensions with Russia. 

But an increasing number of voices say that after the tanks, the F-16s are not likely to be seen as more of an escalation. 

Asli Aydintasbas, a visiting fellow at the Brookings Institute, told The Hill that Russia “defines everything as an escalation.” 

“In reality I think there are some guardrails that have been established between the United States and Russia and there is a tacit understanding not to cross the lines,” she said.

At the same time, Adyintasbas said the US still probably won’t supply the F-16s anytime soon.

“We know the reason why,” she added, “Escalation management.”

 

Intel historic collapse erases US$8 billion from market value

Intel Corp saw about US$8 billion wiped off its market value on Friday after the US chipmaker stumped Wall Street with dismal earnings projections, fanning fears around a slump in the personal-computer market.

The company predicted a surprise loss for the first quarter and its revenue forecast was US$3 billion below estimates as it also struggled with slowing growth in the data center business.

Intel shares closed 6.4% lower, while rival Advanced Micro Devices and Nvidia ended the session up 0.3% and 2.8%, respectively. Intel supplier KLA Corp settled 6.9% lower after its dismal forecast.

"No words can portray or explain the historic collapse of Intel," said Rosenblatt Securities' Hans Mosesmann, who was among the 21 analysts to cut their price targets on the stock.

The poor outlook underscored the challenges facing Chief Executive Pat Gelsinger as he tries to reestablish Intel's dominance of the sector by expanding contract manufacturing and building new factories in the United States and Europe.

The company has been steadily losing market share to rivals like AMD, which has used contract chipmakers such as Taiwan-based TSMC to make chips that outpace Intel's technology.

"AMD's Genoa and Bergamo (data center) chips have a strong price-performance advantage compared to Intel's Sapphire Rapids processors, which should drive further AMD share gains," said Matt Wegner, analyst at YipitData.

Analysts said that puts Intel at a disadvantage even when the data center market bottoms out, expected in the second half of 2022, as the company would have lost even more share by then.

"It is now clear why Intel needs to cut so much cost as the company's original plans prove to be fantasy," brokerage Bernstein said.

"The magnitude of the deterioration is stunning, and brings potential concern to the company's cash position over time."

Intel, which plans to cut US$3 billion in costs this year, generated US$7.7 billion in cash from operations in the fourth quarter and paid dividends of US$1.5 billion.

With capital expenditure estimated to be around US$20 billion in 2023, analysts said the company should consider cutting its dividend.

Pakistan: IMF hopes keep stock market alive

With a controlled hike in the policy rate, along with some positive news flow regarding the start of negotiations between the GoP and the IMF, the market witnessed a rally of 2,400 points from Tuesday to Thursday.

This culminated to the KSE-100 index gaining 5.3%WoW to close at 40,451 points for the week ended on January 27, 2023. As a results average daily trading volume spiked significantly by 76.2%WoW, to 252 million shares.

During the week, the GoP decided to let go of the artificially controlled interbank exchange rate, with PKR subsequently plunging downwards from a US$/PKR parity of 230 to 263, losing 12.5%WoW.

Major news flows during the week were: 1) foreign exchange reserves held by State Bank of Pakistan (SBP) dropped to US$3.7 billion due to external debt repayments, 2) general elections likely to be held in October this year, 3) country to repay US$3 billion debt over the next five months, 4) banks told to give one-time facilitation to importers for release on consignments, 5) currency dealers removed cap on US$-PKR exchange rate, 5) PKR300 billion taxation measures through mini-budget on the way, and lastly 6) IMF team to arrive Pakistan on January 31, 2023.

The top performing sectors were: Miscellaneous, Refinery, E&Ps, Vanaspati & Allied, and Cement, while the least favorite sectors were: REITs, Pharmaceuticals, Textile Weaving, Woolen, and Automobile parts & accessories.

The top performing scrips were: KTML, HBL, SML, KOHC, and CHCC, while laggards were: HINOON, THALL, INDU, ABOT, and SYS.

Flow-wise, Insurance Companies topped the net sellers, offloading US$8.8 million followed by Companies (US$3.9 million), Mutual funds (US$3.7 million) and NBFC (US$0.0 million).

On the buying side Banks emerged top buyers with US$5.0 million, followed by Individuals (US$4.1 million), Brokers (US$3.8 million), Foreigners (US$2.8 million) and Other Organizations (US$0.7 million).

Incoming news regarding developments on the IMF front is bound to invoke a short-term rally, although the longer the agreement takes the more uncertainty will creep back in, keeping investors away.

The PKR eroded value significantly after it was left to market forces, depreciating to PKR263/US$, while country’s foreign exchange reserves dropped to alarming levels (an import cover of merely 3 weeks). Inflation is expected to remain persistent.

US adamant at containing Iran oil sales

The United States is not happy with the upward trend in Iran's oil exports in recent months and intends to take steps to dissuade and put pressure on countries buying oil from Islamic republic, the US state department's special Iran envoy Rob Malley said.

Speaking to Bloomberg TV, Malley said the US extra-territorial sanctions that have been in place on Iran and its oil sales since former US President Donald Trump pulled Washington out of the Iran nuclear deal in 2018 are still very much in place and have not been "loosened or lessened".

He acknowledged the rise in Iran's oil sales since late last year, saying that Washington is monitoring the situation closely, and taking steps to clamp down on the rising flows — particularly when it comes to China. The country has been the biggest destination for Iranian crude by some distance since the sanctions came into force.

"We keep trying…to take the steps we need to stop the export of Iranian oil and deter countries from buying it," Malley said. But when "you focus on China, that's right. It has been the main destination of elicit exports by Iran."

Oil analytics firm Vortexa pegs Iran's overall crude and condensate exports at 1.28 million b/d for the fourth quarter of 2022, up by 56% compared with 818,200 b/d in the third quarter, and up by 51% on 844,700 b/d in the fourth quarter of 2021.

Argus' tracking puts Iran's crude and condensate exports at 1.11 million b/d on average in the fourth quarter, up by 43% from 776,000 b/d in the third quarter, and by 58% from 704,500 b/d in the corresponding quarter in 2021.

The increase in Iranian shipments coincided with a rally in Chinese demand for oil with refinery runs hitting an 18-month high in November 2022, and remaining high in December 2022. Chinese imports from Iran via Malaysia rose to a record high 1.2 million b/d in November, as independent refiners in Shandong province raced to use up their 2022 import quotas, according to Argus data.

Malley said the US has been in contact with the Chinese authorities on the issue and will continue to take steps to sanction all individuals and entities that are found to be involved in the import of Iranian oil. "The conversations we've had with the Chinese, which go back several months, will be intensified," he said.

The US Treasury Department most recently targeted 13 companies in November registered in China, Hong Kong, the Marshall Islands and the UAE over alleged facilitation of oil trader and contravention of US sanctions.

Malley admitted that the US' sanctions on Iran has been far from "perfect" so far but said the US will "do as much as we can" and "everything in our power to make sure that our sanctions are enforced.

 

Pakistan: Revised conditions approved for sugar export

The meeting of the Economic Coordination Committee (ECC) of the Cabinet has revised conditions regarding mode of payment and time period for realization of export proceeds of sugar and decided that cane commissioner Punjab would allocate quota of sugar to the exporters.

The meeting of the ECC presided over by Finance Minister Ishaq Dar on Thursday allowed Provincial Cane Commissioners Punjab as in the case of Sindh to allocate quota within seven days after the issuance of notification and export of sugar within 45 days of allocation of the quota.

The ECC also decided that export proceeds would be received either in advance through banking channel, or within a period of 60 days of opening of Letter of Credit (L/C) for export of sugar on a summary moved by the Ministry of Commerce.

The meeting was informed that the ECC has already allowed export of a total of 250,000 metric tons of sugar on January 03, 2023. However, certain queries have been raised by the stakeholders in the process of export of sugar.

The meeting was further informed that the SBP has highlighted that the ECC’s decision does not specify any timeline for shipment of the export consignment after approval of quota. It poses the risk that exporters may avail quota but not execute the transaction, or may stretch it beyond the timeframe of two months.

The SBP has, therefore, recommended that shipment of consignment be ensured within 30 days of quota allocation. In addition, Pakistan Sugar Mills Association - Pujnab Zone (PSMA-PZ) has also requested that quota for export of sugar may be allocated through Cane Commissioner Punjab as done in the case of Sindh.

The ECC meeting after detailed discussion approved the revised conditions that include: 1) export proceeds shall be received either in advance through banking channel, or within a period of 60 days of opening of LC for export of sugar; 2) the exporter shall ensure that the consignment is shipped within 30 days of quota allocation; and 3) quota for export of sugar may be allocated from already decided provincial quota, through Provincial Cane Commissioner, Punjab, as already approved by the ECC in case of Sindh.

The meeting was attended by Federal Minister for Commerce Syed Naveed Qamar, Federal Minister for Power Khurram Dastgir Khan, Federal Minister for Industries and Production Syed Murtaza Mahmud, Minister of State for Finance and Revenue Dr Aisha Ghous Pasha, Shahid Khaqan Abbasi former prime minister and member of National Assembly, Special Assistant to Prime Minister (SAPM) on Finance Tariq Bajwa, SAPM on government effectiveness Dr Muhammad Jehanzeb Khan, Coordinator to Prime Minister on Commerce and Industry Rana Ihsan Afzal, Governor SBP, federal secretaries, and other senior officers.

 

Northrop Grumman expects strong 2023 revenue on weapon demand surge

US defense contractor Northrop Grumman Corp on Thursday forecast full-year sales above Wall Street estimates, as it benefits from strong demand for weapons from countries ramping up their defense spend.

The United States and its allies have been buying more arms and ammunitions and supporting Ukraine with billions of dollar in military aid after Russia invaded the country last year.

During the quarter, Northrop rolled out its new B-21 Raider jet, the first of a new fleet of long-range stealth nuclear bombers for the United States Air Force.

"We're raising our sales outlook for 2023 and expect to deliver strong multi-year cash flow growth," Northrop Grumman Chief Executive Kathy Warden said.

The Falls Church, Virginia-based company expects 2023 sales between US$38 billion and US$38.4 billion, ahead of the average analyst estimate of US$37.86 billion, and an adjusted profit of US$21.85 to US$22.45 per share, as compared to the estimates of US$22.30, according to Refinitiv IBES data.

Meanwhile, rivals General Dynamics Corp and Lockheed Martin Corp forecast their annual profit below estimates, as the industry grapples with labor and supply shortages.

Northrop, which produces the fuselage for the F/A-18 Super Hornet fighter jet, posted sales of about US$10.03 billion for the quarter ended December 31, 2022, ahead of analysts' average estimate of US$9.66 billion.

Sales in its space systems unit, which makes satellites and payloads, jumped 23% to US$3.28 billion, helped by higher investments towards space exploration projects.

Sale in its defense unit, which makes integrated battle management systems, weapons systems, rose to US$1.66 billion, from US$1.38 billion.

Overall adjusted net income stood at US$7.50 per share, ahead of analysts' average estimate of US$6.57 per share.

 

 

 

 

US Dollar near eight month low

The dollar lolled near an eight-month low against its peers on Thursday, as a gloomy US corporate earnings season stoked recession fears and as traders stayed on guard ahead of a slew of central bank meetings next week.

The US dollar index, which measures the greenback against a basket of currencies, last stood at 101.53, languishing near last week's eight-month trough of 101.51.

Trading was thin on Thursday, with Australia out for a holiday and some parts of Asia still away for the Lunar New Year.

Downbeat earnings and guidance from US corporates and a string of tech sector layoffs have deepened fears of an economic downturn in the United States, leading investors to pare back expectations on how much longer the Federal Reserve will need to aggressively raise interest rates.

"There are now signs the US economy may be slowing in a more meaningful manner," said economists at Wells Fargo.

"With the Fed no longer leading the charge on interest rate hikes and US economic trends set to worsen, we now believe the US dollar has entered a period of cyclical depreciation against most foreign currencies."

The Fed's policy-setting committee will begin a two-day meeting next week, and markets have priced in a 25-basis-point interest rate hike, a step down from the central bank's 50 bp and 75 bp increases seen last year.

Markets expect policymakers at the Bank of England and European Central Bank (ECB), who will also meet next week, to deliver 50 bp rate hikes. The ECB is seen most likely to remain hawkish.

Sterling was last 0.12% higher at US$1.2415, while the euro rose 0.05% to US$1.0920, flirting with its nine-month high of US$1.0927 hit on Monday.

"The euro does draw a lot of attention," said Jarrod Kerr, chief economist at Kiwibank. The euro zone "had a favourable winter .... The energy crisis that people were expecting hasn't quite played out yet."

Elsewhere, the Canadian dollar last traded at 1.3393 per dollar, after the Bank of Canada on Wednesday raised its key interest rate to 4.5% but became the first major central bank fighting global inflation to say it would likely hold off on further increases for now.

The Aussie edged 0.06% higher to US$0.7107, after jumping 0.8% on Wednesday following shock data showing Australian inflation had surged to a 33-year high last quarter, bolstering the case for the Reserve Bank of Australia to raise interest rates again next month.

The kiwi steadied at US$0.6480, having slumped 0.43% in the previous session after New Zealand's fourth-quarter annual inflation came in below its central bank's forecast.

In Asia, the Japanese yen rose 0.3% to 129.21 per dollar.

Bank of Japan (BOJ) policymakers debated the inflation outlook at their January meeting, with some warning that it could take time for wages to rise sustainably, a summary of opinions at their meeting showed on Thursday.

At that meeting, the BOJ kept ultra-low interest rates unchanged but beefed up a monetary policy tool to prevent the 10-year bond yield from breaching its new 0.5% cap. Its decision defied market expectations of further tweaks to monetary policy.

 

Biden to send 31 Abrams tanks to Ukraine

Finally, US President Joe Biden has agreed to send 31 M1 Abrams tanks to Ukraine, matching a German announcement to immediately provide Leopard tanks that Kyiv says are essential in their fight against Russia.

It must be kept in mind that the Abrams tanks are not expected to reach the battlefield for months related to the time needed to procure the tanks and carry out the training necessary for Ukrainian forces, senior administration officials told reporters Wednesday.

The decision to provide the Abrams tanks marks a stunning reversal for the Biden administration, which had previously argued they would be of little benefit to Ukraine.

But the decision to send the tanks helped get Germany to move forward with a separate effort to provide Leopard tanks to Ukraine, which the US had seen as benefitting Kyiv.

German Chancellor Olaf Scholz announced Wednesday that Berlin would send Leopard tanks to Ukraine and allow for other European nations to also send to Kyiv the German-made tanks.

“Today’s announcement really was the product of good diplomatic conversations as part of our regular and ongoing close consultations with allies and partners on security assistance to Ukraine,” a senior administration official said, “Certainly very appreciative of Chancellor Scholz’s announcement today.”

Ukraine lobbied hard for US, Germany and other countries to supply the tanks, which it said would be critical to a spring counteroffensive against Moscow.

“So the tank coalition is formed. Everyone who doubted this could ever happen sees now, for Ukraine and partners impossible is nothing,” Ukrainian Foreign Minister Dymtro Kuleba tweeted.

A senior administration official, responding to a question over whether the delivery of Abrams was a precondition for the Germans to greenlight Leopards, said Biden and Sholz spoke several times by phone over the past month and that the tank discussion was part of an “iterative conversation” between the US and Germany.

“We have closely coordinated our security assistance with allies and partners throughout the conflict, including Germany,” the official said.

Biden spoke Wednesday morning with Sholz, French President Emanuel Macron and British Prime Minister Rishi Sumak, officials said.

A senior administration official said the US expects other nations to announce contributions of additional armored capability, including some that will be readily available for use on the battlefield in the coming weeks and months. 

The administration expects that Russian President Vladimir Putin will push for the Russian military to go on another offensive as the weather improves, another senior administration official said. The tanks decision is meant to help give the Ukrainians the the ability to retake, to reclaim their sovereign territory and that means everything that is recognized by international borders.

The British Ministry of Defense said in a recent intelligence assessment that Ukraine has liberated around 54% of the maximum amount of extra territory Russia seized since it launched its full-scale invasion on February 24, 2022.

Russia still controls around 18% of internationally recognized areas of Ukraine, including the eastern region of Ukraine, called the Donbas, and the Crimean peninsula, which Moscow seized in 2014. Their annexations have been rejected by the US and other international partners. 

Ukrainian President Volodymyr Zelensky has said the full liberation of Ukrainian territory, and in particular Crimea, is necessary for any peace talks with Russia. 

The Biden administration has been careful in offering military support to Ukraine, wary of Putin threats to use nuclear weapons.

Russian ambassador to Germany, Sergei Nechaev, reportedly said in a statement Wednesday that Germany’s decision to approve the delivery of Leopards is extremely dangerous and takes the conflict to a new level of confrontation. 

Western support of advanced military capabilities is viewed as essential for Ukrainians to mount a counter offensive that could threaten Russia’s holding of the Crimean peninsula.

The senior administration official, responding to a question of whether the administration supports Ukraine retaking territory in the Donbas and Crimea, said that the US does not tell the Ukrainians where to strike, where to attack, where to conduct offensive operations.

“Crimea is Ukraine. We’ve never recognized the illegal annexation of Crimea,” the official continued. “But where the Ukrainians decide to go and how they decide to conduct operations in their country, those are their decisions to make.” 

It is expected to take months before the Abrams reach the battlefield. Training of Ukrainian forces for operating and maintaining the tanks is expected to take place outside of Ukraine, the officials said. 

A senior administration official described the coordination on tanks for Ukraine as an impressive display of unity nearly a year into the conflict, underscoring Biden’s focus on coordination with allies and partners. 

“The President has been extremely focused on the importance of alliance-unity, of Trans-Atlantic unity, and we have tried to make that a hallmark of everything that we have done for Ukraine throughout the 11 months of this conflict.”

Maersk and MSC to end alliance beginning 2025

Denmark's Maersk and Swiss-based MSC, the world's largest container shipping companies, said on Wednesday they had agreed to end a vessel sharing alliance in January 2025, allowing them to pursue individual strategies.

The 2M alliance was introduced in 2015 to cope with a glut of ships and weak demand, and to ensure competitive and cost-efficient operations on main shipping routes from Asia to Europe, as well as across the Atlantic and Pacific oceans.

Both companies saw the alliance as a way to manage more capacity after purchasing new mega-ships.

More recently, MSC responded to rising shipping rates caused by pandemic-related delays and bottlenecks by increasing the size of its fleet, while Maersk has kept its fleet size mostly steady.

"Today, we have a much different strategy, where we more look at how to integrate container shipping at sea with our land-based logistics business," Maersk's head of ocean shipping Johan Sigsgaard told Reuters in an interview.

"Operating our own network gives us more flexibility and allows us to connect our ships exactly where we want," he said.

Maersk expects to be able to deliver ocean shipping at the same scale when the partnership with MSC ends without raising the cost of moving each container at sea, Sigsgaard said.

Shares in the company fell after the announcement and were trading 3.6% lower at 1103 GMT.

MSC said in a statement, "We continue to strengthen and modernize our fleet, providing us with the scale we need for the most comprehensive ocean and short-sea shipping network in the market."

MSC, privately owned by the Aponte family, overtook Maersk as the world's biggest container in 2021. Both companies hold market share of around 17%.

"We have been fighting fiercely over customers and market share the last eight years. I don't see increased competition as a result of this," Sigsgaard said.

 

 

 

Bangladesh: Opposition seeking US help

I am obliged to refer to a letter by the Coalition for Human Rights & Democracy in Bangladesh (CHRD Bangladesh) to Donald Lu US Assistant Secretary of State for South and Central Asian Affairs. CHRD has appreciated sincere and commendable works during visit of Donald Lu to Bangladesh on January 14-15, 2023.

It has also referred to its earlier letter dated January 08, 2023, emphasizing the importance of Donald’s visit in view of the ongoing volatile political situation generated by the anti-democratic practices by the administration of Prime Minister Sheikh Hasina in the face of the people’s countrywide movements against her rule.

The people are seeking the end of her fascist regime, which they call illegal because it continued to capture power since 2009 through massive election fraud. Bangladeshis want free and fair elections under a neutral authority. We look forward to the materialization of your objectives at the soonest.

The CHRD Bangladesh may take this opportunity to highlight a few core foreign policy objectives of the US administration: Human Rights, Freedom of the Opposition’s Political Activities and Election Integrity.

Human Rights Human rights still remain a far cry in Bangladesh. The regime apparently maintained a slight pause in its repressing activities during your visit, but intensified them on the people and the opposition immediately afterwards, as if in retaliation of the pressure of your visit.

The human rights violations by the notorious Rapid Action Battalion (RAB) and police might have shown slight improvements since the US sanctions in December 2021, but their routine abuses against the people continued unabated, much of which perhaps escaped the attention of the monitoring agencies.

On January 21, 2023, a RAB member in Dhaka was caught trying to rob a car carrying passengers coming from overseas. Few people can talk, much less criticize, the regime under the draconian Digital Security Act (DSA).

They continue to be severely penalized for mild words against the Sheikh family and the ruling elites. 

In Bangladesh today, only the ruling Awami League has the freedom of activities which include extortion, social crimes and attacks on the political opposition. The opposition parties have little or restricted political activities (lately as prescribed by the ruling authority).

The RAB, police and the party thugs continue to flex their muscles against the opposition and prevent or disrupt their peaceful gatherings and activities. Their attacks on the party gatherings of the Bangladesh Nationalist Party (BNP) on December 07 and 08, 2022 sent many to their graves, hospitals and jails. Even during your team’s presence in Dhaka on January 14-15, 2023, their terror acts continued on the peaceful gatherings of the opposition in Mymensingh, Chittagong and other cities, sending many to hospitals and jails with multiple charges against each.

Reportedly, 24,000 members of the BNP have been taken to custody since early December of 2022. As of now, tens of thousands of them are in jails, booked under about 3.5 million fictitious charges. 

With the scrapping of the election-time Caretaker Government (CTG) by Sheikh Hasina immediately upon becoming the Prime Minister, the election system in Bangladesh totally collapsed. It became a symbol of heightened corruption and irregularities. No national or local level election had an iota of fairness or honesty.

Everything was controlled and managed by the ruling coterie to make its chosen candidates the winners. As such, as you may note, Sir, the representatives in the parliament, as well as the elected positions in the local bodies, almost entirely belong to the ruling class. In other words, the opposition has no say in any of these forums or anywhere. Any future elections to be free and fair, the existence of these fraudulently elected partisan elements will be a serious blockade.

The Election Commission and the election officials are carefully selected by the government to serve its purpose. With absolute control on the administration down to the lowest levels, including the election apparatus, the opposition is either unable or not allowed to make any electioneering activities or have its presence at the polls.

In many cases, suspected opposition voters were driven away by the Awami League thugs and their votes were proxied in favor of the ruling candidates. In addition, rounding up and sending the opposition leaders and activists to jails prior to elections had been routine tasks of the loyal RAB and police.

The results of the past 14 years are before anyone to examine and judge. Consequently, the country has fallen into a one-party authoritarian dictatorship since 2009. Under the chosen Election Commission, election officials and its fraudulently elected local bodies, the general public has no chance to exercise its free franchise during the polls.

As such, a fair and credible election under the present administration is a simple impossibility. The US may also ponder why the Hasina regime is vehemently opposed to elections under a CTG (citing constitutionality of her own vicious creation).

According to most observers, the ruling government is so unpopular and detested by the people that it has no chance of winning even a comfortable number of seats, let alone winning in a fair election. In view of the above situation, and with a view to ensuring credible elections in Bangladesh, the following steps are extremely essential:

Elections must be held under a neutral Caretaker Government, members of which should not be allowed to seek any elected positions. Prior to that, the government should step down and the parliament be dissolved. They (immediate past government) should have no role in the CTG.

The Election Commission and other election related officials should be reconstituted with neutral and non-partisan elements.

All controversial and partisan officials in the administration, including law enforcement agencies and the military should be removed. Even known partisan officials in the judiciary should also be either removed or suspended. This is needed to ensure the neutrality of the election-time administration.

All authoritarian tools, such as the RAB and DSA should be suspended during the elections.

Honorable Sir, it may be appreciated that if the people of Bangladesh can freely choose their representatives to run the government, most of the other problematic issues like democracy, human rights, freedom, corruption etc. will be resolved automatically. Under a corruption-free and accountable government, the country will be expected to move forward to greater progress and security, both locally and globally. It is the unelected or fraudulently elected or illegal regime that causes problems for the people and the world.

Finally, unless the future elections in Bangladesh are credible, fair and participatory, all the sincere efforts of the US will end in futility. The CHRD Bangladesh certainly does not desire such an outcome from your visit, Honorable Sir.